5 Ways Big Data Impacts the Insurance Industry

Health, auto, life, home, property and disability are just some of the many types of insurances available on the market today, and all of them are constantly looking for ways to increase their margin. Insurance is one of the industries that can derive the most use from big data’s predictive analysis.

Health, auto, life, home, property and disability are just some of the many types of insurances available on the market today, and all of them are constantly looking for ways to increase their margin. Insurance is one of the industries that can derive the most use from big data’s predictive analysis. Insurance companies win or lose based on their ability to accurately predict future risk and charge adequate premiums to allow them to successfully pay claims while still maintaining a profit.

Nearly all of what they do is based on a complex set of statistics that attempts to predict when someone will get in an auto accident, or when an individual’s house will burn down or when someone will get sick. For most companies, even today, their methods just aren’t as precise and accurate as they would like or as they could be if they were to implement big data. In an industry that runs so much from statistics, the ability to gather and analyze enormous amounts of data that was previously unusable is extremely valuable.

Here are five ways big data is leaving its mark on insurance.

1. Predicting future diseases

As technology improves, so too does the ability to predict future diseases. And predicting future diseases is extremely important for health insurance companies. With big data, companies are now finding ways to monitor patients’ current health status while still looking at their potential for future diseases.

As companies continue to hone these skills, the ability to predict future diseases not only helps insurance companies improve their premium offerings, but more importantly it gives consumers better options as to which insurance to purchase to give them the most protection possible at the best price.

2. Premium rates

Most importantly from a consumer standpoint, the improvement in data gathering and predictive analytics means better premium rates with improved service. There’s nothing worse than paying a high premium for poor service. Unfortunately, in today’s insurance environment, that’s the case more often than it should be.

As companies use big data to better understand and evaluate current and future risk factors on an extremely large scale, they are not only able to reduce risk, but also improve services.

3. Claims payment

Another service that will be improved is claims payment. To a consumer there’s nothing more frustrating than going through a long, difficult claims process. The company is slow to respond in the first place. Then it’s difficult to go through the actual process of proof and paperwork, and then it seems to take forever to actually get paid. Thanks to big data’s abilities, companies are making the claims process easier than ever.

4. Reducing fraud

Another area that’s highly toxic in the insurance industry is fraud. Millions of dollars are lost each year due to fraudulent claims. Fraud is a curse to insurance companies and consumers alike. The more fraud that occurs, the higher premiums honest insurees are going to pay. Companies are going to do everything in their power to make back that lost money, and that means higher premiums.

Using big data, social media, mobile apps and other tools, insurance companies can combat fraud like never before.

5. Advertising

Another area of insurance that can expect a big impact from big data is advertising. Companies spend millions of dollars each year marketing their products and services. Like any other industry, insurance can be extremely cutthroat and the thinnest of margins can spell the difference between success and failure. So, many companies go big when it comes to marketing.

Unfortunately, if money is spent on marketing, that means it’s not being spent on the consumer. Whether it’s through better services or lower premiums, that money could be used elsewhere for more productive means if companies could improve their marketing ability. More effective marketing brings down costs and increases success. That’s what these companies are looking for and big data gives them the tools to do it.

With big data platforms, it’s easier to pinpoint target audiences. It’s easier to track successful marketing and unsuccessful marketing and quickly change. Measurements are more accurate and can be received quicker. Companies can develop better strategies for web and mobile marketing strategies.

Better services, lower premiums, higher profits all can come to the insurance industry as they implement the power of big data analytics into their everyday processes.